If there was a house that I really wanted to buy, but the current owner(s) of the home wasn’t looking to sell, but I was willing to offer 25% more than the market value of the home as estimated by a real estate appraiser, is there any legal way I could contact the homeowner to negotiate a transaction?
If you were a homeowner, would you entertain unsolicited offers for such a transaction provided that the offers were made with a hefty premium over the “true” value of the home, meaning that you’d consider selling when presented with such an offer when you hadn’t considered selling at all beforehand?
Sure. You can call them or write them and offer. I’d be thrilled if someone wanted to buy my house like that. No realtor fee, no stress wondering if it would sell or not. Sounds great!
Years ago a developer wanted to buy my house to demolish it as he needed to build an access road to some land behind me. They wrote to me, offering c. 20% over the value. At that price I was very interested. Deal never happened in the end. Still, worth a try.
For many people 25% would just not be enough to consider bothering. It would involve them in the issue of buying again - and moving, and the entire trauma of upending their life. Sure, if they are a serial home-owner, or hurting for money, maybe, but for many people home is well, home. You would need to look at the total cost of the swap to the current owner. How much tax would be paid on the purchase of a new house, how much in the way of other duties and fees, how much to move, how much to re-establish a comfortable life. Personally I would find 25% close to marginal. I like where I live, I have been there 12 years, it isn’t a typical house, finding somewhere like it would be hard, my cats like it. And so it goes. For many owners with no particular financial worries 25% would just not be worth the time. Given that you are prepared to pay so much of a premium one might assume that there is something special about the place, something not reflected in the conventional market value. There is a good bet the current owner has the same feeling. If they can get somewhere they love more for only a 25% premium less all the costs of buying and moving somewhere else, why don’t you just buy the place that they would go to?
Nothing prevents you from ringing the doorbell and making an offer but 25% over market is not a particularly compelling profit margin for a homeowner not interested in selling, especially given the costs and hassles involved in to relocating.
I’d be inclined to send a letter rather than ring the doorbell, gives them a bit more time to digest and consider. I agree with the other posters that 25% may not be enough, but you never know, and there’s certainly no harm in enquiring.
I get offers about once a month on my house. Realtors or prospective buyers write me. I’d consider 200% the market value. We’ve got prop 13 though, and my property tax would probably at least triple. The house looks like an abandoned shack, but it’s in a very, very desirable neighborhood.
In the go-go real estate years ca. 1970’s, I once got an unsolicited, signed, legal offer in the mail for more than what I thought my house was worth. It was subject to considerable conditions (inspections, etc.) but if I had been interested in selling, I might have pursued it. It was probably the result of a speculator’s drive-by.
This. Our current home is so ideal for us it would take a ridiculous offer to make us even consider selling. Enough cash to retire on? We’d consider it, but ideally we’d retire to this place.
You might also want to consider that 125% of market value might not cover the outstanding loans. Most homes are currently under water on their mortgages.
There’s nothing stopping you from offering, but you should be aware that many, many homeowners don’t really think of their houses as investments to be bought and sold, but as places to live, and would want a lot of money to sell it, irrespective of it’s market value; my favorite shirt’s “market value” is about $0.25, but I wouldn’t sell it for twenty times that amount.
Those that do see it as an investment are probably well aware that it’s a buyer’s market and are unwilling to sell for that reason. My brother is so far underwater that 25% over market value would still be less than he paid for it, meaning he had nothing to show for years of equity-building. No way he’d sell.
Zillow has a “make me move” feature. People who are only thinking about selling or just open to the possibility can list their house and see if someone overwhelms them. Generally, it’s about 50% over market.
Personally, the first thing I’d think of if I received that kind of letter would be “scam,” but then I’m a cynic. I think I’d rather be approached face-to-face.
We’re having his happen with our cabin, right now. Our neighbor’s cabin is for sale, a developer wants to buy that cabin and our cabin, raze them, and build a monstrosity. We have no desire to sell.
My poor Mom has been nagged by the developer and the neighbor every time she is up there. It’s become almost harrassment. She asked the developer how much he’d pay - he lowballed it big time (the property is valued at $225K, he offered $100K - telling her the property is “too much” for little ol’ her).
She’s threatened to put a restraining order against him and the neighbor.
Another thing to keep in mind is that you don’t know the person doesn’t want to sell. Just because there isn’t a sign up on the property yet, doesn’t mean that the homeowner isn’t planning to call a realtor and get the ball rolling tomorrow.
I bought my second house just this way in 1975. Walked up to the door and said my wife liked the house & would she sell. She was planning on calling a realtor the next morning.
I have knocked on several door since then. They said no but no one got mad at me for asking.
Back in the 1960’s my family was living in a neighborhood that was just beginning to become integrated. Sleazy real estate speculators literally walked up and down the street, knocking on everyone’s door and telling them the Blacks were coming, but if the owner sold RIGHT NOW, they would pay above (what would surely soon collapse) market value. I saw both my mother and father having to slam the door on some particularly insistent slime.
I can’t answer that from the standpoint of the seller, but I bought my house that way. It was not on the market and had not been listed. I heard through the neighborhood grapevine that my neighbors were building a new house and were thinking of selling theirs. So I marched up, banged on their door, and asked them if that was true. The neighbor replied with, “Yes! We’re going to sell this house. Wanna come in and see it?” Within a couple days, I’d convinced my realtor to make an offer and we closed about a month later.
If the situation were reversed and someone banged on my door with “I love your house; is it for sale?” I would tell them no, but take their contact information in case I decided to sell.
Bottom line: A house doesn’t have to have an MLS listing to make a legal offer. The owners can always reject any offer that’s made.